Economic Applications of Optimal Control Theory: Regional Growth and Allocation of Investment
Economic Applications of Optimal Control Theory: Regional Growth and Allocation of Investment

Author(s): Stilianos Alexiadis
Subject(s): Economy
Published by: ASERS Publishing
Keywords: regional growth; optimal control theory; optimal growth
Summary/Abstract: Optimal growth and allocation of investment across spatial units - that is to say regions, constitute two major applications of the Optimal Control Theory in regional economics and economic geography. This chapter provides a detailed examination of the process through which the path of optimal regional growth and the allocation of investment can be determined within the framework of Optimal Control Theory. This theory describes the process of maximizing a given objective function. When the focus is set upon a spatial economy, the objective function may include a single aim - such as maximizing aggregate growth. Nevertheless, it is possible to detect cases in which the objective function includes two different, even competitive aims: promotion of aggregate growth and interregional equity. This case is also examined in this chapter.

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